Franchise Lawyer Blog

Restaurant Franchises Battle Data Thieves

Many business owners in and around New York City are concerned with theft. From shoplifting to timecard theft to being overbilled by vendors or contractors, theft can significantly impact a business’s bottom line. Recently, many business owners also find themselves dealing with a very elusive type of theft: the data breach.

Franchises have become a major target of data thieves, according to a recent news report. Restaurant franchises appear to be taking the most hits and several prominent chains have been victims of data theft in just the past month or so.It was reported last week that the tea shop chain Teavana may have been subject to a data breach, with thieves making off with customer information that included credit card details. Earlier this month the grocery chain Snucks announced that a data breach led cybercriminals to access 2.4 million customer credit cards. And, back in January a Georgia-based chicken restaurant chain reported that malware-which is used to steal customer credit card and debit card data–was found on computers in more than 100 of its locations.

Cyber thieves prey on franchisee customer information in a number of ways. Some might hack into computer services by figuring out passwords; other methods include using malware or installing software onto point-of-sale machines in order to steal information from magnetic credit card strips.

This type of theft is very problematic for a number of reasons. Data theft exposes customers to identity theft and financial fraud, and this in turn can sour customers’ opinions of the business from which their information was stolen. In addition to this, franchisees can be left with liability issues and fines after a data breach. In fact, has reported that many small businesses that experience data theft find themselves shuttered within 12 months of the breach.

It is in the best interests of franchisors and franchisees to protect against data theft. In general, the way to do this is to build and maintain a secure network. Of course, that is much more complicated than it sounds. Franchisees should be sure to do their due diligence when entering into a franchise, and be sure to learn what type of Internet training, support and security will be offered by the franchisor. Franchisors and franchisees may also benefit from discussing cyber theft concerns and data security requirements when working on the business formation process with their franchise law attorneys.


Atlanta Journal-Constitution, “Restaurant franchises on guard against data thieves,” March 3, 2013, “Tea Chain Teavana Possibly Hit by Data Breach,” April 23, 2013

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